Demand Response Programs: Demand Response Programs: Configuring - - PowerPoint PPT Presentation

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Demand Response Programs: Demand Response Programs: Configuring - - PowerPoint PPT Presentation

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Demand Response Programs: Demand Response Programs: Configuring Load as a Resource for Configuring Load as a Resource for Competitive Electricity Markets Competitive Electricity Markets Charles Goldman E. O. Lawrence Berkeley National

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SLIDE 1

Demand Response Programs: Demand Response Programs: Configuring Load as a Resource for Configuring Load as a Resource for Competitive Electricity Markets Competitive Electricity Markets

Charles Goldman

  • E. O. Lawrence Berkeley National Laboratory

CAGoldman@lbl.gov

NARUC Winter Meeting Washington DC

  • Feb. 13, 2002
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SLIDE 2

Energy Analysis Department

Overview of Presentation Overview of Presentation

  • Key Policy Questions
  • Types of Demand Response Programs
  • DR Program Results: 2001
  • Lessons Learned
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SLIDE 3

Energy Analysis Department

DR Programs and Electricity Markets - DR Programs and Electricity Markets - Policy Questions Policy Questions

  • How much demand response is

needed?

  • What has been performance of markets

in eliciting demand response?

  • Is this response sufficient to improve

system reliability or economic efficiency? (e.g., value & costs of DR “insurance”)

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SLIDE 4

Energy Analysis Department

Demand Response Program Types Demand Response Program Types

  • C/I Non-firm Rates
  • Up-front payment; typically bill or rate discounts for curtailments to

pre-set Firm Service Level

  • Direct Load Control
  • Utility interrupts customer loads (e.g., a/c, water heating)
  • Demand Bidding - Call option
  • Reservation and energy reduction payments
  • Customers selects Strike Price. LSE can “call” the customer,

requiring them to reduce load or face penalties, when projected

  • Mkt. Price > Strike Price
  • Demand Bidding - “Quote option”
  • Purely voluntary. Customers pledge to curtail loads at specified

time, price (“pay-per-interruption event”)

  • Dynamic Pricing (e.g., real-time pricing)
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SLIDE 5

Energy Analysis Department

Case Studies of DR Programs Case Studies of DR Programs

Independent System Operators

  • ISO NE, NYISO, PJM, CA ISO

Utilities

  • Ameren, BGE, Cinergy, ComEd, Dominion Virgina,

KCPL, Nevada, Otter Tail, NYSEG, PacifiCorp, PGE, PSE, SDG&E, Sierra Pacific, Xcel Energy, SCE, PG&E

Retail Energy Suppliers/Aggregators (e.g., CSP)

  • AES NewEnergy, ConsumerPowerLine, Global Energy

Federal Power Marketing Authorities

  • BPA
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SLIDE 6

Energy Analysis Department

System Events and DR Market Activity: System Events and DR Market Activity: Summer 2001 Summer 2001

  • 14 programs operated once or not at all
  • However, several programs played critical role in

mitigating system emergencies

5 10 15 20 25 30 35 C3 C4 E1 E2 I1 J1 L2 N2 N3 P2 R S U1 U2 A B C2 D F G H I2 J2 K L1 N1 O1 P1 Q T

Number of Curtaiment Events

Almost Daily

Contingency Programs Market Programs

Almost Daily

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SLIDE 7

Energy Analysis Department

Summer 2001 Wholesale Prices ($/MWH) Summer 2001 Wholesale Prices ($/MWH)

200 400 600 800 1000 East Lower MW Upper MW West Maximum Average Post-Caps

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SLIDE 8

Energy Analysis Department

Actual Performance of DR Programs: Actual Performance of DR Programs: Summer 2001 Summer 2001

  • NYISO EDRP provided ~425 MW (L2)
  • CAISO only called once (E1,E2)

100 200 300 400 500 600 700 800 C4 E1 E2 I1 J1 L2 P2 U2 A C2 D F H I2 L1 O P1 Q

MW

Potential Curtailable Load Actual Average Curtailed Load

Contingency Programs Market Programs

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SLIDE 9

Energy Analysis Department

Actual Performance of DR programs Actual Performance of DR programs

  • Load relief from “market-driven” DR programs

is often less predictable than “contingency- related” DR programs

  • Why?
  • - Incentive Mechanisms (e.g., penalties)
  • - Low wholesale electricity prices
  • - Definitional issues: Potential curtailable load?

Average Values for Case Study Programs Program Number of Programs Potential Curtailable Load (MW) Actual Curtailed Load (MW) Actual/Potential

Contingency

8 158 84 62%

Market

10 204 21 17%

Type

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SLIDE 10

Energy Analysis Department

Back-up Generators: Balancing Back-up Generators: Balancing “ “reliability reliability” ” and environmental concerns? and environmental concerns?

  • BUGs are popular load curtailment strategy
  • Environmental impacts are major concern,

particularly for diesel-fired BUGs

100 200 300 400 500 600 700 800 C4 J1 L2 P2 R U2 A B C2 D F G H K L1 O P1 Q T S Potential Curtailable Load (MW) Non BUG BUG Contingency Programs Market Programs

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SLIDE 11

Energy Analysis Department

What types of customers participate What types of customers participate in DR programs? in DR programs?

  • Industrial customers are backbone of

current DR programs in our sample

  • Increasing activity by commercial,

institutional customers

Industrial 50% Manufacturing 14% Commercial 23% Institutional 9% Other 4%

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SLIDE 12

Energy Analysis Department

Current DR Programs target largest Current DR Programs target largest C/I customers C/I customers

  • Why? - metering, savings potential,

transaction costs, program design rules

  • Challenge: tapping DR potential of

medium/small customers

Very Large (>1 MW) 53% Small (<100 kW) 8% Medium (100-500 kW) 12% Large (500-1000 kW) 27%

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SLIDE 13

Energy Analysis Department

Customer Load Reductions rescued Customer Load Reductions rescued CA during 2001 Crisis CA during 2001 Crisis

  • 6-8% reduction in electricity sales; 10% reduction in

monthly peak demand

  • Data normalized for weather and economic growth (based
  • n CEC analysis

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Jan Mar May Jul Sep Nov Reductions in Peak Demand (MW) and Electricity Sales (GWh) Peak Demand Reduction Electricity Sales Reduction

= 8.6% average = 7.9% average = 10.1% average = 6.3% average

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SLIDE 14

Energy Analysis Department

Contributing Factors to CA Demand Contributing Factors to CA Demand Reduction: Role of EE (Summer 2001) Reduction: Role of EE (Summer 2001)

~4000 MW CEC Peak Load Reduction Program (~100 – 200 MW) 20/20 Rebate Program Utility Energy Efficiency Programs (~300 MW) Flex Your Power & Media Campaign Real Time Meters Additional Electricity Rate Increases (~30% average) CAISO and Utility Demand Response Programs (~800 MW, 1 event) Voluntary Conservation and Curtailment Initiatives at Gov’t Facilities and Private Sector (~300 MW + ?)

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SLIDE 15

Energy Analysis Department

Performance of California Load Mgmt Performance of California Load Mgmt Programs during the Crisis Programs during the Crisis

  • Interruptible Rate Programs operated 23 times in 2000 and 30

times in 2001

  • GOOD NEWS: Critical to avoiding rotating outages on at least five
  • ccasions in 2000
  • BAD NEWS: Frequent operation caused many customers to

refuse curtailment requests and drop out

500 1000 1500 2000 2500

5/22/2000 6/14/2000 6/26/2000 6/27/2000 6/28/2000 7/19/2000 7/31/2000 8/1/2000 8/2/2000 8/14/2000 8/15/2000 8/16/2000 9/13/2000 9/18/2000 11/13/2000 11/14/2000 11/15/2000 12/4/2000 12/5/2000 12/6/2000 12/7/2000 12/10/2000 12/11/2000 1/9/2001 1/10/2001 1/11/2001 1/16/2001 1/17/2001 1/18/2001 1/19/2001 1/20/2001 1/21/2001 1/26/2001 2/12/2001 2/13/2001 2/14/2001 2/15/2001 2/28/2001 3/15/2001 3/19/2001 3/20/2001 3/27/2001 3/28/2001 3/30/2001 3/31/2001 4/2/2001 4/3/2001 5/7/2001 5/8/2001 5/9/2001 5/10/2001 5/31/2001 7/3/2001

Total Curtailed Load (MW) CPUC Suspended Program Operation 2000 2001

Stage 3 Emergency Stage 2 Emergency No Emergency

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SLIDE 16

Energy Analysis Department

Summary: DR Industry at Crossroads Summary: DR Industry at Crossroads

  • ISO programs growing in importance; but need to

work out ISO roles/responsibilities in DR market

  • ISO DR Programs = ~1500 MW (2001) vs ~200

MW (2000)

  • Near-term outlook for “Market-driven” DR programs is

unclear

  • New capacity additions + slowing economy =

lower wholesale prices forecast for 2002

  • Will there be much activity if customers require >$150-

200/MWh to bid in large amounts of load

  • Ambivalence & regional variations regarding role of

backup and on-site generators (e.g., diesel-fired)

  • FERC Regional RTO Rulemaking – key forum for

defining “rules of the game”

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SLIDE 17

Energy Analysis Department

DR Industry: Challenges & DR Industry: Challenges & Opportunities Opportunities

  • Key role of Intermediaries for long-term viability of

DR market

  • Utilities: Incentives to perform??
  • Retail energy suppliers: DR is not stand-alone business,

so vibrant retail market is enabling condition

  • Curtailment Service Providers: niche players? Who will

want to play – ESCOs?

  • Reposition existing Utility Load Management

assets

  • Recognize that customers are NOT generators;

loads are diverse & respond to multiple objectives

  • Making the case for “Public Benefits” value of

“demand response” market